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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGHAND SHRI GIRISH AGRAWAL
आदेश /O R D E R
PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:
This appeal by the assessee is arising out of the order of Commissioner of Income-tax (Appeals)-16, Chennai in ITA No. 425/CIT(A)-16/2014-15 dated 24.09.2018 against the order of ITO, Non Corporate Ward 15(3), Chennai passed u/s. 143(3) of the Income- tax Act, 1961 (herein after referred to as “the Act”) dated 31.08.2016.
M/s. Maheshwari Builders 2 ITA No. 60/Chny/2021 AY: 2014-15 2. The grounds taken by the assessee in the appeal are reproduced as under: “1. The order of The Commissioner of Income Tax (Appeals) 16, Chennai dated 24.09.2018 in I.T.A.No.425/C1T(A)-16/2014-15 for the above mentioned Assessment Year is contrary to law, facts, and in the circumstances of the case. 2. The CIT (Appeals) erred in sustaining the levy of penalty u/s 271B of the Act for the belated furnishing of the audit report u/s 44AB of the Act in Form No.3CD without assigning proper reasons and justification. 3. The CIT (Appeals) failed to appreciate that the levy of penalty u/s 271B of the Act was wrong, erroneous, unjustified, incorrect and not sustainable in law and ought to have appreciated that the order imposing penalty under consideration was passed out of time, invalid, passed without jurisdiction and not sustainable both on facts and in law. 4. The CIT (Appeals) failed to appreciate that the delay in filing the audit report electronically by 83 days was on account of the reason beyond the control of the Appellant and ought to have appreciated that the provisions in section 273B of the Act envisaged discretion to consider the reasonable cause shown for such delay. 5. The CIT (Appeals) failed to appreciate that non consideration of the reasons for the small delay within the scope of section 273B of the Act would vitiate the sustenance of the penalty imposed in relation thereto and ought to have appreciated that the reasons given in Page No.5 of the impugned order were cryptic, thereby vitiating the reasons recorded therein. 6. The CIT(Appeals) failed to appreciate that there was no proper opportunity given before passing of the impugned order and any order passed in violation of the principles natural justice would be nullity in law. 7. The Appellant craves leave to file additional grounds/arguments at the time of hearing.”
At the outset, we note that there is a delay of 843 days in filing this appeal by the assessee. The date of service of communication of the order as noted in Form 36 is 24.09.2018 and the appeal has been filed on 15.03.2021. The petition for condonation of delay for 843 days along with affidavit is placed on record by the assessee. The appeal ought to have been filed by 23.11.2018. The Ld. Counsel of the
M/s. Maheshwari Builders 3 ITA No. 60/Chny/2021 AY: 2014-15 assessee submitted that the assessee had received the impugned order for which the appeal documents for filing the appeal before the bench were prepared and made available to it on 26.09.2018. However, accounting staff of the assessee committed mistake in obtaining the signature of the available partner of the assessee firm on the appeal documents. Further, he submitted that the auditors of the assessee firm during the finalization of accounts in March, 2021 brought to knowledge of the assessee, the fact about non filing of appeal against the impugned order. When this fact was brought to its knowledge, the assessee took immediate steps in filing the present appeal along with the petition for condonation of delay and affidavit explaining the reasonable cause to consider the plea for admission of the appeal.
We have duly considered the contentions of the ld.Counsel and gone through the record. Sec. 253(2) of the Act, contemplates that the Tribunal may admit an appeal after the expiry of relevant limitation period, if it is satisfied that there was a sufficient cause for not presenting it within the prescribed period. Similarly, it has been used in Sec.5 of the Indian Limitation Act, 1963. Whenever interpretation and construction of this expression has arisen for consideration before the Hon’ble High Courts as well as before the Hon’ble Supreme Court, then, Hon’ble Courts were unanimous in their conclusion that this
M/s. Maheshwari Builders 4 ITA No. 60/Chny/2021 AY: 2014-15 expression is to be used liberally. We find guidance from the decision of the Hon’ble Supreme Court in the case of Collector Land Acquisition v. Mst. Katiji & Ors., 1987 AIR 1353. It is suffice to say that whenever the reasons are assigned by an applicant for explaining the delay, then, such reasons are to be construed with a justice oriented approach. Therefore, for the just decision of the controversy, we find it appropriate to condone the delay, though stated to be of 843 days which comprises of period relating to Covid-19 pandemic also and thus, admit it for adjudication.
Brief facts of the case are that the assessee filed its return of income on 22.02.2015 with turnover of Rs. 2,64,72,095/- which is more than Rs. 1 crore and is covered by the provisions of section 44AB of the Act. In the course of assessment completed u/s. 143(3) of the Act, Ld. AO noted that assessee had submitted its Form 3CB electronically by 21.02.2015 which is beyond the extended due date i.e., 30.11.2014. The Ld. AO observed that the assessee is required to electronically file its return of income along with tax audit report in Form 3CB on or before the due date i.e., 30.09.2014 extended to 30.11.2014 as required u/s. 139(1) of the Act. The Ld. AO further noted that the assessee has had failed to file its return of income on or before due date specified u/s. 139(1) of the Act, to get accounts
M/s. Maheshwari Builders 5 ITA No. 60/Chny/2021 AY: 2014-15 audited and to file the audited accounts with tax audit report before the due date and thus initiated the proceedings for imposing penalty u/s. 271B of the Act. The show cause notice was served to the assessee to explain why penalty u/s. 271B of the Act should not be levied for failure to comply with the provisions of section 44AB of the Act. In response, the assessee submitted that there was a cash transaction more than the limit as per the provisions of the Act and the assessee was lended the money in person by Manvika for which there was a delay in the obtaining the confirmation letter which in turn delayed the issuance of audit report. The said confirmation letter dated 20.12.2014 was placed on record from the person Manvika. The tax audit report was then filed on 21.02.2015. The Ld. AO held explanation and reason given by the assessee for delay in electronically filing Form 3CB as not satisfactory and proceeded to levy penalty of Rs. 1,32,360/- u/s. 271B of the Act.
In the course of hearing before us, Mr. S. Sridhar, Advocate represented the matter on behalf of the assessee and Mr. Chinthapalli Mehar Chand, JCIT & Mr. Guru Bashyam, CIT represented on behalf of the Department.
Ld. Counsel for the assessee submitted that due date for filing the tax audit report was extended up to 30.11.2014. The tax audit
M/s. Maheshwari Builders 6 ITA No. 60/Chny/2021 AY: 2014-15 report was obtained and filed electronically on 21.02.2015 which was delayed by 83 days. He pointed out that in the course of assessment, Ld. AO noted the fact of delay in filing the tax audit report. The assessment was completed u/s. 143(3) of the Act on 31.08.2016, wherein the returned income was fully accepted. Ld Counsel thus laid emphasis on his contention that the purpose of tax audit report is to assist the Assessing Officer in assessing the total income of the asessee correctly in compliance with the provisions of the Act. Since, in the present case, the said purpose was achieved as the assessment was completed by accepting the returned income, the technical default of filing of Form 3CB i.e., tax audit report with a delay of 83 days ought to be condoned in the light of reasonable cause that exists in the delay. He submitted that provisions of section 271B of the Act is not mandatory and is subjected to the provisions of section 273B of the Act, wherein the Ld. AO is vested with discretion for imposing the penalty considering the factual matrix of each case. Ld. Counsel further submitted that the delay of 83 days is attributable to the fact of delay in obtaining the confirmation letter from Manvika in respect of loan obtained by the assessee which was required by the tax auditor for expressing their opinion in the tax audit report. The confirmation letter is dated 20.12.2014 placed on record in the typed set of papers submitted by the Ld Counsel in the course of hearing, containing 14 pages along with his written submissions. It was thus contended that
M/s. Maheshwari Builders 7 ITA No. 60/Chny/2021 AY: 2014-15 the delay in obtaining the confirmation letter from Manvika required by the tax auditor for expression of opinion in the tax audit report constituted reasonable cause within the meaning of section 273B of the Act and therefore, the penalty imposed u/s. 271B of the Act ought to be deleted by condoning the delay of 83 days. Ld. Sr. DR strongly opposed the contentions made by the ld Counsel and submitted that the penalty has been rightfully imposed by the Assessing Officer and confirmed by the Ld. CIT(A).
We have heard the rival contentions, perused the material on record and gone through the written submissions made by the Ld. Counsel submitted during the course of hearing. Before adverting on the issue in hand, it is proper to refer the relevant provisions of the Act i.e., section 271B of the Act which is reproduced as under: Failure to get accounts audited. "271B. If any person fails, to get his accounts audited in respect of any previous year or years relevant to an assessment year or furnish a report of such audit as required under section 44AB, the Assessing Officer may direct that such person shall pay, by way of penalty, a sum equal to one- half per cent, of the total sales, turnover or gross receipts, as the case may be, in business, or of the gross receipts in profession, in such previous year or years or a sum of one hundred fifty thousand rupees, whichever is less". [emphasis supplied by us] The reasonable cause explained for deletion of the penalty imposed is dealt u/s. 273B of the Act which is reproduced as under: 31[Penalty not to be imposed in certain cases. 273B. Notwithstanding anything contained in the provisions of 32[clause (b) of sub-section (1) of] 33[section 271, section 271A, 34[section 271AA,] section 271B 34[, section 271BA], 35[section 271BB,] section 271C,
M/s. Maheshwari Builders 8 ITA No. 60/Chny/2021 AY: 2014-15 36[section 271CA,] section 271D, section 271E, 37[section 271F, 38[section 271FA,] 39[section 271FB,] 40[section 271G,]] 41[section 271H,] clause (c) or clause (d) of sub-section (1) or sub-section (2) of section 272A, sub- section (1) of section 272AA] or 42[section 272B or] 43[sub-section (1) 44[or sub-section (1A)] of section 272BB or] 45[sub-section (1) of section 272BBB or] clause (b) of sub-section (1) or clause (b) or clause (c) of sub-section (2) of section 273, no penalty shall be imposable on the person or the assessee, as the case may be, for any failure referred to in the said provisions if he proves that there was reasonable cause46 for the said failure.]” [emphasis supplied by us]
8.1 From the reading of sections 271B and 273B of the Act, it is noted that penalty is imposable on the failure of getting accounts audited and obtaining a report of such audit as required u/s. 44AB of the Act when the said failure is without a reasonable cause. Also, section 271B of the Act uses the word ‘may’ giving discretionary powers to the Assessing Officer for imposing the penalty.
From the record, we find that it is an undisputed fact that there is a delay of 83 days in obtaining and furnishing electronically, the tax audit report in Form 3CB for the year under consideration. The tax audit report is dated 20.02.2015 which is also the date when it was electronically furnished by the assessee. The extended due date within the meaning of section 139(1) of the Act for the year under consideration was 30.11.2014. It is also undisputed that the assessment has been completed u/s. 143(3) of the Act vide order dated 31.08.2016, wherein the returned income of the assessee has been accepted as such. To explain the reasonable cause which exists
M/s. Maheshwari Builders 9 ITA No. 60/Chny/2021 AY: 2014-15 for delay in obtaining and furnishing tax audit report in Form 3CB by the assessee, Ld. Counsel submitted that delay in attributable to receiving of confirmation letter which was necessary in the formation of opinion by the tax auditor in completing the tax audit in Form 3CB. The transaction of loan is not undisputed, however, there was a delay in obtaining the confirmation letter from Manvika in respect of the said loan which led to delay in obtaining and furnishing the Form 3CB from the tax auditor by the assessee. From the plain reading of section 273B of the Act, we note that no penalty shall be imposable for the failure referred to in the relevant section if the assessee proves that there is a reasonable cause for the said failure. In the present case before us, there is a failure on the part of the assessee in obtaining and furnishing the tax audit report in Form 3CB as required u/s. 44AB of the Act. However, there exists a reasonable cause as explained by the Ld. Counsel corroborated with relevant documentary evidences which persuades us to delete the penalty imposed by the Ld. AO and confirmed by the Ld. CIT(A). Considering the facts on record and the documentary evidences along with explanation furnished, we find it proper to delete the penalty of Rs. 1,32,360/- levied u/s. 271B r.w.s. 273B of the Act.
In the result, the appeal filed by the assessee is allowed.
Order pronounced on 27th May, 2022 at Chennai.
M/s. Maheshwari Builders 10 ITA No. 60/Chny/2021 AY: 2014-15
Sd/- Sd/- (िगरीश अ�वाल) (महावीर �सह ) (GIRISH AGRAWAL) (MAHAVIR SINGH) लेखा सद�य /ACCOUNTANT MEMBER उपा�य� /VICE PRESIDENT चे�ई/Chennai, �दनांक/Dated, the 27th May, 2022 JPV आदेश क� �ितिलिप अ�ेिषत/Copy to: 1. अपीलाथ�/Appellant 2. ��यथ�/Respondent 3. आयकर आयु� (अपील)/CIT(A) 4. आयकर आयु� /CIT 5. िवभागीय �ितिनिध/DR 6. गाड� फाईल/GF.